Time to Buy a New Car

Ok, if the embarrassment of driving around with a banged up car wasn’t enough to push me to buying a new model, the water(?) leak in my trunk(?) and random loud squeaking noises when the car gets started up, I’ve determined it’s time to make my next purchase. That means I have to do one of my least favorite things in the world: car shopping.

The good news is that even if my car completely breaks down, I’ll be fine. It would be a bit of a pain but I could easily take a bus to a shuttle bus to get to my office and back. Yes, an 8 mile trip would then take about an hour and a half one way, but it would be do able. My plan all along was to wait until my car completely died and then wait for the perfect car to come along while taking public transit.

But my car is dying a very, very slow death. And being the illogical frugalista that I am, I’ve put off buying something newer for a while now. It’s time. Or, it’s time to stop driving this car and just accept public transportation as a way of life. I’m almost tempted to donate it now just to force myself to stop driving it (I really shouldn’t be showing up at my office in the state it’s in.)

I’m torn over what car to buy now. Choice is my archenemy. It was much easier when I bought my last car and I had less than $15k in the bank, rent due, and knew I wanted a car that was as cheap as possible while still being quality enough to last me a “long time.” I think I made a good choice at the time, opting to spend a little more on a nicer used Toyota vs some of the other options I tried. And for the past seven years, that car has treated me well, even keeping me safe in an accident when I ended up spinning in a ditch and thanking god I’m alive (for the record, I was completely sober but overly exhausted at the time, lesson learned.)

Now, with a $100k salary and $200k in the bank, I seem to be the type of person could buy something a little nicer. Not “luxury,” per se, but a newer car. At this point it doesn’t make any sense to lease or buy a new car because I’d need high comprehensive insurance, and I’m already paying through the roof on basic monthly car insurance with my DUI-inflicted SR-22. I’m not sure how much my insurance will go up by just switching the car on my account, but I do know if I buy a nice(r) car I’ll be nervous about not having any comprehensive insurance on it. I’ve used my comprehensive insurance to pay for quite a few car issues over the last seven years including my car getting broken into (three times) and hitting a deer. I also know myself and as much as I’d like to pretend I’m a great driver, I do have a tendency to drive slow into inanimate objects. So why waste money on a nicer car?

But, on the other hand, I don’t want to buy another beater. I appreciate my v6 engine more that I realized, and I’m too in love with my moonroof to part with it. I’ve found that ever since obtaining my freedom via car ownership, I’ve been a lot less depressed. There’s nothing I love more than going out for a drive when I feel like it with my moonroof open and smoothly accelerating to the speed of highway traffic.

So I need to figure out:

What Car/Model Should I Get?

Should I pay cash or finance?*

Would it make any sense at all to lease a “fun car” now so that in 3 years I can buy a sensible 4-door sedan or SUV in time for starting a family? (probably not due to the insurance issue above, among other reasons why leases make no sense.)

When should I buy?

Regarding #1, I’ve narrowed down my choices, though I still have a few more cars to test drive. I can figure that out. Jetta? Camry? Mini? Accord? Sonata? (*unfortunately I’m a design snob and most of these cars went through major design changes around 2011, leaving the models 4-5 years old butt ugly. The 2007 and later Camrys are ok. Jetta got its makeover in 2011. Le sigh on my first world problems.)

#2 is a bit more complicated. I don’t have a lot of liquid cash right now as I keep most of my money locked up in investments. This may be stupid according to some finance experts, but I know that I could sell my stock if needed (much of it is in taxable accounts due to not having access to a 401k until just a few years ago) and if I needed money even quicker, my parents or boyfriend would give me a loan. At this point my job seems relatively secure, and as long as I keep kicking ass and taking names I should be able to keep the job for a while (or I’ll have somewhat of a heads up on the company needing to cut back as where I work is very transparent with our status, thank goodness.)

So I could sell some of my stocks (hey AAPL, I’m talking to you) and have cash to pay up front within the next week. That probably makes the most sense.

Or, I could put off investing in my 401k for the next few months and save cash until I have enough to pay for the car in full. Figuring I buy a $15k car, I could theoretically save $2000 or more a month. It would take me 8 months to save up if I cut off my 401k investments (I’ve already put in $4500 this year up front.)

Or I could finance the car. All signs point to this is a terrible idea in that I’ll end up paying more in the long run and I’ll have a monthly payment for the years ahead all while I’m trying to move in with my boyfriend in a pricier housing situation. BUT – I’m wondering if my credit would be improved if I finance a car, and if this could help for potential future home ownership. Financing the car, I’d know I have the stock semi-liquidity to make my payments on the full cost of the car (as long as I don’t go buy a Rolls Royce) so if the job situation were to turn sour, I’d still be ok. Yet paying more for a car doesn’t seem to make a lot of sense, unless it would really help with my credit, and even then I’m not sure why anyone would finance a car unless they were buying something they couldn’t really afford.

Tonight, I’m looking into places to donate my old car. The fact that it’s still drivable is making it hard for me to take buying a newer car seriously, but I also am, at 29, too old (and too professional) to drive such a broken car. It was nice once, but nice it isn’t anymore.

I bet you wish you sold AAPL right when you made this post! So you are really looking to sell your old car before buying a new one? I would vote for the 2013 Ford Fusion as well. It starts at only $21k and is real nice looking. Plus, with a new car, you'll have a good warranty and will have to put nothing into it for the first 5 or so years.

Hah, tell me about it. I lost $7000 this week on paper. Granted, I'm still "up" on AAPL (my avg price per share purchased is around $350) but I'm certainly concerned that AAPL will go below $350 at some point. I'm considering selling 50% of my shares and diversifying (and using some of that to pay for a car.) But that seems like a dumb move as AAPL could go up again in the next 6 months. Not to $700 a share (should have sold then! Buy and hold is apparently a bad move for a stock like AAPL) but maybe it will get back to $500/$550.

I am in the same boat with car problems but I am older and pretty broke.

My driver's door is frozen shut because of the extreme cold in Canada this week and I have to crawl in from the passenger door and over the centre console. No skirts of heels for me on the cold days.

I am going to start a savings account for a car and live with the climbing for another winter or 2. It only freezes on the really cold days and that happens to be all this week.

As for style and look of the car that has to count for something. I drove a boring beige box for several years and I was never happy walkiing up to it. I also had trouble finding that car in parking lots because it blended in to the background.

Based on your list, have you considered the Ford Fusion? It was recently redesigned for the 2013 model year and looks the best out of all the family cars imo. Also, have you heard of Carwoo? I don't have any first hand experience using it, but my cousin did and bought his car that way.

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About Me

The anti-minimalist: I'm the absolute worst with money. I have a shopping addiction. That's exactly why this blog exists. HECC is not a typical personal finance blog. I started it in 2007 to hold myself accountable for binge spending, a dropping networth, and lack of overall fiscal literacy. 10 years later, had achieved a networth of over $500k. Now my goal is to hit $1M by 40. Recently married and with my first kid on the way, things are about to get... interesting. I write about the intersection of mental health and money, spending & investing, and millennial personal finance.